HINDSIGHT:  FVR'S  DIMENSIONS  OF  REFORM

MANILA, September 14, 2004 (STAR) HINDSIGHT By Josefina T. Lichauco - On August 11, former President Fidel V. Ramos was the guest speaker at the monthly meeting of the Philippines-Finland Association (PFA). He is the only honorary member of the PFA, and was chair of the P/F trade mission to Helsinki in 1999. I was privileged to chair the succeeding one because by then, Finland’s Nokia had become a big factor in the accelerated telecom development thrust of the Philippine government.

We had an unusually big crowd that day. I guess the audience was eager to find out what he had to say about the country’s current state of affairs, in the aftermath of the national elections. President Arroyo had not yet declared a state of "fiscal crisis" for the Philippines. Actually, the chairman of the PFA, Ramon K. Ilusorio, had provided him with a short list of topics to choose from. We were of course not surprised that the caption of his speech was "President Arroyo’s Tough New Mandate."

It is still fresh in my memory when FVR ordered a stronger push toward the de-monopolization and liberalization efforts in the telecom sector. It was in fact during his incumbency when the fundamental law for telecom development and de-monopolization was issued in 1995.

There was also the fact that at many international conferences that we government functionaries had attended, our heads were held up high, proud that the Philippines had been named the "new tiger cub" of Asia.

It was FVR who made sure, very strictly in fact, that the members of his Cabinet performed their functions rigidly. One memory stands out for me. During the strike of the Metro Transit Organization workers (which operated the first light rail transit line from Baclaran to Monumento), he asked me: "Are you sure you can handle this?" I said yes, instantly. It was my fear of what he would scribble to me in blood red ink, which impelled me to make sure that the strike would be resolved in a timely manner – in fact, at 3 a.m., after the rail paralysis that lasted just a couple of days.

Since I was privileged to do the honors of introducing him, my reference to FVR’s red ink was done certainly more than once.

Before an eager audience (led by the incumbent president of the PFA, Simo Hoikka; the incoming president, Atty. Ed Tarriela; and quite a number of Finnish and Filipino businessmen led by Claus Karthe, chairman of Wireless Services Asia), FVR started by mentioning the 4 Cs that President Arroyo’s leadership should give top priority to: 1) consolidate; 2) continue; 3) compete; and 4) clean up. I think however that beyond the rhetoric of the 4 Cs, his underscoring of the problems spanned by an enormous fiscal deficit and the consequent crippling public debt burden, as well as the need therefore to raise state revenues and stabilize the macro economy – though oft-repeated by the public and media – caught the audience’s attention.

Today, just a little over a month after his speech was delivered, President Arroyo’s declaration of a state of fiscal crisis and the call-to-arms for belt-tightening and austerity measures, formalized the assessment by almost all sectors that indeed the Philippines is going through an extremely difficult and critical time. FVR said, "Not only are these problems choking the economy, they are also eroding investor confidence, our credit-worthiness and our country’s global competitiveness."

He referred to the Asian Development Bank (ADB) who now sees the Philippine economy as caught in a "vicious cycle, where capital scarcity implies low incomes, low incomes imply a limited capacity to save, and limited savings leading to limited investment and capital scarcity."

He stressed that the bottom line is that our economy must begin to surpass itself, since growing at its normal rate would not be good enough. This has to happen within a period of at least 10 to 12 years consecutively, because the alternative would be for our country to be reduced to a backwater in the world’s fastest growing region.

He underscored the fact that the 11th and 12th congresses had lapsed into history leaving a lot of reform legislative measures undone. These include, among others, the indexing of excise taxes for alcoholic drinks and tobacco; the conversion of the Bureau of Internal Revenue (BIR) into a National Revenue Authority; also a new law that would rationalize and simplify the incentives the state awards to investors.

He pointed to the fact, which I think is very important amid our problems today, that foreign perception of the defects in the EPIRA law which have allowed cross-ownership among the generation, transmission and distribution components of electric power, creating an uneven playing field in favor of entrenched local interests, has militated against the early privatization of Napocor.

Yet, according to him, we must waste no time in confronting the issue of Napocor’s continuing losses and our high-cost private power providers. Of course, the Transco bill still has to pass the Senate.

"There are other measures," FVR stressed, "that are urgent to enhance peace and order, ease mass poverty, mobilize knowledge, and raise national productivity." He emphasized the urgent need to "right-size" (not down-size) the bureaucracy.

After opening up the communications sector formally in 1995, he advocated the further opening up of the air, maritime and land transport sectors that are sectors within the jurisdiction of the Department Transportation & Communications.

FVR’s rhetoric reached maximum levels of emphasis as he tackled the reforms pertaining to political patronage; the fact that monopolists, cartelists, and political entrepreneurs have historically been more influential in this country than elsewhere in East Asia; the fact that "cleaning up" must not only involve the environment including garbage, but especially "the messy things and undesirable practices that have eroded the people’s faith in government."

Corruption, tax evasion, red tape, electoral fraud, complacency and the lax enforcement of laws, he alluded to as "corrosive disincentives to investors that our country’s strategic location in the middle of the South China Sea and the Pacific Ocean, and our high-quality, and very trainable workers are hard-put to offset."

A fundamental postulate that FVR spelled out was the concept of "Limited Government," a concept especially attractive to the young members of his audience. Young executives like Marco Yuchengco Santos, vice-chairman of the International Property Ventures Group (IPVG), and my son, Martin Lichauco, country manager of Walden International, both in their thirties, holding responsible business positions who made sure to attend and listen, are familiar with government bureaucracy and are very aware of business repercussions should the fiscal crisis not be controlled.

I myself subscribe to the former president’s views on this concept: "Our foremost economic principle should be to reduce government’s power to decide winners and losers in business, by curtailing its authority to award or withhold incentives, concessions, franchises and monopolies." According to him, government’s role is to provide the framework of political stability, the rule of law, the sound macro economic policy, and the physical and human infrastructure within which enterprise can flourish, leaving all the rest to individual and corporate effort.

Attacking corruption as a degenerative disease of government, I totally subscribe to his view that political corruption may cause authority to disintegrate and the state to collapse.

It was therefore very appropriate when he ended with a quote from Dr. Jose Rizal who, about a hundred years ago said, "The time has come to tell ourselves that if we wish to be saved we must redeem ourselves."

* * * Thank you for all the e-mails you sent through jtl@info.com.ph.


Reported by: Sol Jose Vanzi

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